Compare Consolidation Loan Student
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Many students and parents cannot afford the rising costs of a higher education. Majority of these
students have multiple student loans. These loans belong to different creditors. These creditors
have different terms of agreement, interest rates and billing cycles. Loan Consolidation allows
students to have these loans turned into one new loan. This new loan would be handled by one
creditor.
When students consider choosing a loan consolidation creditor they need to consider the
creditor’s requirements, terms of agreement, interest rates and benefits. Student loan
consolidation has two methods; these are Federal and Private loan consolidation. Most private
creditors advise you to first apply for a Federal student loan consolidation to maximize federal
benefits.
Federal loan consolidation is when the U.S. Government or the U.S. Department of Education is
the creditor. Federal student loan consolidations are specifically created for low-income students
and parents. There are two programs available for Federal Loan Consolidation: Federal Family
Education Loan Program (FFELP) and Federal Direct Student Loan Program (FDLP). These
programs consolidate federal loans including Stafford Loans, Federal Perkins Loans and PLUS
Loans.
v For a student to be eligible for federal loan consolidation the following would be checked or
required:
§ Credit history would be checked.
§ A student would need to be a U.S Citizen or a permanent resident.
§ The student must be either a full or half-time student.
v Federal loan limits are set by Congress. These are the limits as follows:
§ Year 1: $2,625
§ Year 2: $3,500
§ Years 3 & 4: $5,500
§ Graduate $8,500
v Ten years is the standard repayment period. This period can be extended up to 25 years for
students with a $30,000 debt.
v Federal loan consolidation has a standard formula for interest rates. The interest rate is the
weighted